Lansner: Dunkin' Donuts site search requires out-of-the-box thinking

July 14, 2014

Updated 1:19 p.m.

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A box of a dozen Dunkin' Donuts. This one's from the Dunkin'/Baskin-Robbins store in San Diego. FILE: MARK RIGHTMIRE , STAFF PHOTOGRAPHER

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Ideal location for a Dunkin' franchise? A right-hand turn off a busy commuter street, says Joe Haupt, who has the rights to 10 stores in South County. MARK RIGHTMIRE , MARK RIGHTMIRE, STAFF PHOTOGRAPHER

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An employee pours a cup of coffee at the Dunkin' Donuts/Baskin-Robbins store in San Diego located adjacent to the Embassy Suites San Diego Bay and across from Seaport Village. FILE: MARK RIGHTMIRE , STAFF PHOTOGRAPHER

How do you find the right location for a new doughnut shop in an already crowded morning-food playing field?

Welcome to the challenge for Dunkin’ Donuts. The fabled East Coast bakery/coffee chain is coming to Southern California to do battle with the likes of coffee powerhouse Starbucks and a host of independent doughnut shops.

To see how one might solve this grand real estate puzzle, I chatted about the site selection headache with Joe Haupt, a partner with Precision Hospitality & Development. The Newport Beach group has the franchise rights to open 10 Dunkin’ Donuts in south Orange County.

Precision Hospitality just got its first government approval for a new Dunkin’ Donuts, in a to-be-built structure at La Paz Road and McIntyre Street in Laguna Hills scheduled for an early 2015 opening.

Haupt has an intriguing development resume that includes a stint doing real estate work for Walt Disney Co., development consulting, as well as his own development work. His approach to site selection seems part nerdy mathematician, part street-pounding detective.

“You never find the best site just by looking at ‘for lease’ signs,” Haupt says.

There’s an overall thesis at work: A solid hunch that the bulk of Dunkin’ Donut’s Southern California business will be morning trade serving folks commuting to work.

“It’s the most ritualistic part of our day. For 90 percent of us, the routine is the same,” Haupt says.

This means finding locations on major streets that get folks from homes to freeways. These sites should be accessed by right-hand turns on that daily trip – though Haupt said he’ll consider places where an easy left turn is required. But where is an easy left found in Southern California during the morning rush?

“If you want that cup of coffee, and there’s nowhere else on your commute – you’re going to make that left,” Haupt says.

So the first cut to potential locations made by Haupt involves slicing and dicing government traffic data to find the business intersections as the center point for various deeper site searches. This list was weighted toward intersections near residential centers, not job hubs – as coffee-and-doughnut consumers tend to buy their meals early in their commutes.

Additionally, demographics in the neighborhoods feeding those traffic hubs could be critical – though Haupt admitted in South County the demographics were pretty much universally acceptable.

“We want to be near the rooftops, where people are living – not near the airport or Irvine Spectrum,” Haupt says.

Next came a key refinement to the hunt: custom traffic studies. Government data doesn’t offer enough detail on the timing or direction of traffic, so Haupt had to pay for tracking of individual commuting patterns.

“If it's busy at lunch, that's not very helpful,” Haupt says.

Of course, the competition has to be factored into the formula. Haupt says he doesn't mind sharing a block with a Starbucks or another coffee/breakfast-foods retailer – as long as it’s a fair fight. That is, he won't do battle with a drive-through competitor, unless Dunkin’ can get one, too.

“You can’t just take a knife to a gunfight,” says Haupt.

Once Haupt has indentified ideal streets comes the trickiest part: Finding available retail space or a buildable site. That’s no easy feat in a region where there’s so much retailing.

“Retail real estate is as competitive as I’ve ever seen it,” Haupt says.

The obvious commercial real estate listings of vacant sites don’t usually help this kind of search. Haupt says it requires literally going door-to-door, talking to numerous landlords and tenants to see who's open to new ideas – whether it be changing established plans or rearranging existing property.

“To find the diamond in the rough, you have got to do things differently,” Haupt says.

The Laguna Hills site fits the out-of-the-box mentality.

The property owner had a retail center with excess parking capacity – space that could be redeployed to build a new, 2,000-square-foot shop for Haupt’s group: a Dunkin’ Donuts complete with a drive-through window.

The new Dunkin’ will sit on the morning commute side of La Paz, a road bringing commuters from homes in Laguna Hills, Dana Point and Aliso Niguel to the I-5. The new store will be a fifth of a mile before the ultrabusy intersection with Cabot Road – where a Starbucks (lacking a drive-through) and a freeway entrance sit.

“It's a strong place to capture our target customers,” Haupt says.

Of course, we'll wonder if there’s any potential synergy between a new Dunkin’ Donuts and the shopping center’s major tenant: a 24 Hour Fitness gym.

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